Insider transactions can give investors a more complete view of activity within the world’s publicly-listed companies. No one has more information in relation to a company’s performance and future prospects than its leaders.
In this report, we are going to highlight some interesting insider buying at SelectQuote Inc (SLQT:US). SelectQuote offers a direct-to-consumer comparison platform that enables people to find auto insurance, home insurance, and senior health insurance. Its proprietary technology helps people find the right coverage with the right provider at the right price in just minutes. It is listed on the New York Stock Exchange and currently has a market capitalization of $1.45 billion.
SelectQuote Inc: Insider Buying
Our data shows that on 30 August, a number of top-level insiders at SelectQuote made large stock purchases. Those who bought shares included:
- CEO Tim Danker (117,000 shares)
- CFO Raffaele Sadun (95,000 shares)
- COO William Grant (230,000 shares)
- Chief Revenue Officer Robert Grant (230,000 shares)
Combined, these four insiders spent around $5.8 million on SLQT stock.
This insider trading activity stands out as it is a classic example of a ‘cluster purchase’ – where multiple insiders are buying stock simultaneously. This is generally a very bullish signal as it shows that there is a consensus of opinion within the company that the stock is undervalued.
This cluster purchase looks particularly bullish as not only are top-level insiders involved but their trades are very large. The fact that the four insiders – all of whom are likely to have a superior level of information on the company – have spent nearly $6 million on stock suggests that they are very confident the stock is set to move higher.
SelectQuote recently posted a mixed set of fourth-quarter and full fiscal 2021 results.
While the performance for Q4 was underwhelming (adjusted EBITDA was down 47% year on year while net income fell by $16.7 million to $3.3 million), the performance for the full fiscal year was solid.
For the 2021 fiscal year, consolidated revenue was $937.8 million, a 76% increase over the consolidated revenue for the fiscal year ended 30 June 2020, while consolidated net income came in at $131.0 million, an increase of $49.9 million over the figure of $81.1 million posted a year earlier. Adjusted EBITDA for the fiscal year was $228.0 million compared to $154.0 million a year earlier.
Looking ahead, management was confident about the future. “We continue to have high conviction in our differentiated model and our ability to scale quality growth in 2022 and beyond. We believe that SelectQuote’s strong connection with our end customers creates differentiated value and we expect Population Health to strengthen that bond in the years to come,” said CEO Tim Danker. “We expect cohort-level IRRs to remain very attractive,” added CFO Raffaele Sadun.
In light of this confidence from management, we see the insider buying here as a bullish indicator. The large buys indicate that insiders expect the stock to bounce back after a period of underperformance.